Kashmir remains the main thorn in relations between India and its arch- foe, Pakistan, upon whom suspicion of responsibility for the attacks in Mumbai has fallen.

Hostages rush out of the Taj Mahal hotel in MumbaiPhoto: AFP/Getty

By Isambard Wilkinson in Islamabad

6:11PM GMT 27 Nov 2008

The attacks came as the two countries re-engaged in peace talks to resolve the dispute over Kashmir.

Militants involved in the Mumbai massacre spoke of abuses in Kashmir, over which India and Pakistan have fought two of their three wars and where more than 40,000 people have been killed since the 1980s.

Terrorists groups, like Lashkar-e-Taiba, have launched numerous high- profile terrorist attacks in India in the past and have brought the two rivals to the brink of possible nuclear war.

Jihadi outfits like Lashkar-e-Taiba, which was formed with the help of Pakistani military intelligence in the 1990s to fight in Indian-held Kashmir – but which denied any involvement in the Mumbai attacks – have sustained the Kashmiri insurgency.

India has repeatedly accused Pakistan of encouraging terrorist attacks over the disputed border.

The New Delhi government accused Pakistan's military intelligence, the ISI, of involvement in a suicide bombing on the Indian embassy in Kabul which killed more than 30 people in July.

Violence has been sharply reduced, but still nearly 800 people were killed last year in a revolt against Indian rule that broke out in 1989.

Most angry, young Kashmiris want total independence, rather than accession to Pakistan which, like India, to whom Britain apportioned the state at independence in 1947, claims all of divided Kashmir.

Last week violence erupted during the second stage of state elections in parts of Indian-administered Kashmir, and several people were killed by security forces.

The Indian-administered area of Kashmir was put under federal rule in July following the collapse of the state government over a land transfer deal for a Hindu shrine that led to riots and the death of 45 people.

Pakistan's president, Asif Zardari, has attempted to improve relations with India saying they should not be held hostage to Kash He angered Pakistani conservatives this year when he branded militants operating in Kashmir "terrorists".

But since the resignation of his predecessor, the former military ruler Pervez Musharraf, in September Pakistan-based militant groups have resurfaced.

Analysts say the conservative establishment has allowed the militants to take advantage of the Mr Zardari's weak government to regroup.

They say that a circular tit-for-tat series of attacks is in motion: Pakistan supports jihadis in Kashmir; Pakistan accuses India of in turn supporting Taliban militants fighting against Pakistani security forces along the Afghan border.

Hardliners belonging to intelligence agencies from both countries will not miss an opportunity to "bleed" their neighbouring enemy.